Part II - TRAC Principles

Section C: Quality assurance and validation

Chapter C.2 Institutional committee confirming compliance

1. An appropriate Committee of the Board (or equivalent) should confirm compliance with TRAC requirements. Compliance is the responsibility of institutional managers and institutions would generally wish to involve their Finance Committee in ensuring that this is achieved. The Audit Committee can, independently, on the advice of the internal audit service, confirm this compliance.
2. The Audit Committee should oversee the programme of internal audit and should receive reports from the internal auditor. The Audit Committee should report to the Governing Body that it has done this and whether it is satisfied on the extent of the compliance with the TRAC requirements. The Audit Committee may advise the Finance Committee (or other appropriate committee).
3. TRAC reporting to the relevant Funding Council is made by the head of institution as accounting officer. He/she would satisfy him/herself that the institution has complied with the TRAC requirements, reassured by advice from internal audit. Depending on the committee structure and governance relationships, the Finance Committee or other appropriate committee should receive a report on the compliance and maintain a strategic overview of the development of costing and other financial management initiatives in the institution.
4. To give the Committee assurance that the outcomes are ‘fair and reasonable’ it should also be provided with information on:
   • key assumptions, with a rationale that indicates that their use is fair and reasonable;
   • supporting evidence that shows that the cost drivers for the larger items of cost represent the use of or benefits from those resources;
   • the results of tests for reasonableness and other checks on the time allocation and cost attribution figures;
   • the results from the time allocation method.
5. Management should present these to the Finance or other appropriate committee along with the information to be reported under TRAC. A reconciliation with the audited financial statements should be included as part of this.
6. It is worth reiterating a key principle of TRAC requirements. Institutions are free to use alternative methods to those suggested in the costing standards, and discussed in the Guidance. However, to do this, they must be able to demonstrate that the information reported is at least as robust as that produced under the methods suggested in the Guidance.
7. The Audit Committee (informed by the internal audit service) should satisfy itself that this is the case.